tv Keiser Report RT November 14, 2013 4:30pm-5:01pm EST
james gall birth sat down with one off in studio to discuss debt ceiling debt crisis and the deficit of knowledge in congress you won't want to miss that it's coming right up but now let's get to the ship. with the holidays just around the corner and we decided to kick off today's headlines with some debt free jubilee now this story it started all a little over one year ago when a group of occupy wall street activists created these strike down debt project known as rolling jubilee today the group has managed to abolish almost fifteen million dollars worth of personal debt now described on its website as
a bailout of the people by the people rolling jubilee buys debt for pennies on the dollar but instead of collecting on that debt they don't abolish it now by purchasing the debt are dramatically reduced prices the group has managed to free thousands of people from debts the group has focused on by and mainly medical debt and with spending only four hundred thousand they've acquired fourteen point seven million dollars worth of debt not too shabby. in other news timothy mossad was in charge of cleaning up the last financial crisis so why not employ him to prevent the next one well that's exactly what president obama does has decided to do obama name a saudi chairman of the commodity futures trading commission on tuesday to see if d.c. polices some of wall street's riskiest activity and as top cop of the c.e.o. of t.c. mr assad will no doubt put to use his experience as a former assistant secretary of the treasury and while in that position he oversaw the unwinding of the troubled asset relief program better known to most people as
tarp if confirmed by the senate massage it will replace gary gensler. and finally starbucks announced tuesday that it will pay kroft foods two point seven five billion billion with a b billion dollars to end a lengthy dispute over distribution of packaged coffee now the payment was ordered by an arbitrator following the coffee giant early terminations of a bagged coffee grocery deal between starbucks and foods starbucks said that bridge contract agreements a mismanaged the brand while kraft denies this of course they demand that starbucks pay them a fair value for the business the award will now go to monday's international which spun off from crawford twenty twelve. those are some your headlines for today i was always will be tracking these stories and keeping you posted on all the latest.
now just last month u.s. national debt seventeen trillion dollars by historical record but also unprecedented is the rate at which the debt is growing now it is grown from about one trillion in one nine hundred eighty two five trillion in two thousand there is an additional ten trillion over the past decade now i should note that this does not account does not account for inflation now some including economist peter schiff have warned that the rapid growth in public debt will never believe leads to a u.s. default however not everyone is in agreement earlier i sat down with james k. gall birth professor at the university of austin texas and son of prolific economist john kind of the culprit i first asked him if the fears about u.s. public debt crisis are overblown. absolutely no crisis in the public debt of the state so yes fears to that point are. completely overblown now you say that the
ceiling the debt ceiling is an anachronism based on the idea that the government must raise money from elsewhere before it is able to spend that money why is this this not the case today well the debt ceiling initially was a back to did nine hundred seventeen you know that was a device to facilitate the issuing the bonds for the first world war. since that time we have moved to a system which is. very much a system of what you call what i call money and when the government writes you would check your bank simply credits that sum to you or to your balance of the government does not actually. to find the money any way anywhere it simply sends a signal to your bank and the money appears now why do you believe the u.s. government will never ever have a problem finding its public expenditures and deficits because the electricity supply to the computers that send those signals will never be cut off it's not
simple simple as that every day and they can't be cut off if you see you know now much of the us dead it's in the form of short term bahrain and that needs to eventually be rolled over obviously what's this mean in terms of the country's future financial strength nothing in particular. obviously it would be possible for those who hold u.s. treasury bills and bonds to sell the some other countries obligations but first of all there aren't enough of those obligations out there in the world to make up for the supply of us run so it's not a practical option and secondly there is no other. asset out there which other countries and other creditors regard as being as secure so the chances of this happening. on any substantial scale are really very remote and if it did then you know the european central bank and the russian central bank of the people's
bank of china would all step in and buy up the assets because they don't want the u.s. dollar to flow now it can only it's not even my next question i don't know how you're going to answer this but why are the hmong term rates on t. bonds so low because the short term rates have been low for such a long time now. practically zero sense the big beginning of the crisis in early two thousand and nine that. people buying u.s. treasury bonds have an expectation that the fed is going to keep in that position and they're probably right and as a result the long term yields have fallen in the you the prices have risen it's that simple simple as that so it's just going to say well the fed is in a bit of a box because it has while it has been so. parts of the leadership of the federal reserve have been talking about tapering about reducing the program of. capital assets when they do that causes a great slaughter in the markets and then they have been obliged basically to back
off so that has reinforced the expectation this is going to go on for a long time but you've said in the past that you believe markets are unreliable cracked there's been evidence of this well depending on what you mean by that but the fact that you know they're doing this like you said the tapering even murmurs of taper has caused major fluctuation in the markets so if that happens what would be the results you know if the taper. if there were a real change of policy by the fed that was determined then you would almost immediately see yields rising and that would cause a new wave of mortgage defaults and to wage a wave of problems in the private sector and the result of that is either the fed would tolerate a significant impact on actual economic activity or they would once again say oops no we didn't mean to do that and stop and my guess is that the second outcome is much more likely in fact what's much more likely now is we have simply see them receding into the background and doing very little on this front for the
foreseeable future now some argue that the united states is the next greece in terms of sovereign credit and you know you have a particular position on this how would you respond to such an argument united states cannot be anything like. greece except by inflicting on itself the kind of austerity policies that the greeks have had imposed on them by the by the troika. troika so interesting russian word actually how you are getting around you do you draw that in there. in terms of the financial stability of the united states the conditions of the two countries are totally different. the greeks have to earn euro in order to pay interest on their bonds and the united states government does not need to earn dollars in order to pay dollar interest on dollar bonds so. it simply as the world sees this is not just the united states the same
the world has equal confidence in britain or germany or japan for example plants too for that matter so it's kind of comparing apples to oranges of the something the u.s. can print money and it's own money correct and cannot write about it like this now what percentage of congress do you think understands the relationship of debt and the economy. if i got all of them off the record i imagine i could find one or two . really i haven't tried it if you're dead pan serious on it's ok my next question then now you've lectured congress multiple times yet your message on dead deficits does not seem to be trickle wien down here at home. is it difficult to make affect of policy if the majority of americans including the politicians and when i say the majority of americans have no idea how the engine actually works that's a huge challenge absolutely and this is a situation which has been going on in the united states for forty years roughly
said richard nixon took the us all closed the gold window with nine hundred seventy one and changed the can the real financial relationship of the united states to the rest of the world we became the reserve currency in a major way the one nine hundred eighty s. and it's true our political leadership does not understand the significance of this fact and simply doesn't doesn't understand it at all doesn't understand the relationship between our trade deficit our budget deficit and they make assumptions that the desirable state is some thing called balance in which revenues and expenditures become equal to each other which is not only completely undesirable for the united states it's also a practical impossibility. it is a promise from possibility it's so long as the u.s. maintains its position as a supplier of reserve assets to the world it cannot run a. trade balance or budget balance for anything but
a very short period of time ok now dick cheney he once said that i want to get this straight reagan proved that deficits deficits don't matter he was more in boston by both sides for making this this comment do you agree with mr cheney on the deficit matter. means me to say so but i do can you expand please well this was the experience the people in the reagan administration had that they launched a program based upon a very large tax reduction very large increase at least one aspect of government spending. and they were threatened with the same kind of calamitous financial outcomes and yes interest rates went up in the early reagan years and i t v one eighty two but then they stabilized and came down again simply because the federal reserve changed policy so it became clear that the reagan administration could in fact get away in the world the climate that was just being established at
that time with the financial. posture that they took. coming up more with jim and what happens in congress refuses to read the reason the debt ceiling we discussed what a u.s. default would entailed and smile all your own mug shot i'm not joking now websites that publish mug shots and then charge arrestees hundreds of thousands of dollars or just hundreds however much it ends up taking to take the pictures down are now in the spotlight rachel courteous and i discuss how credit card companies which off the life of this profitable business that's coming up in today's big deal and as we had to break here's a quick look at some of today's closing numbers. there's
a war on for a piece of the mud yes the government is tolling out some maggot infested pieces of mud pie benefits and the peasant voters are beating each other up trying to grab a slice or two and if that fails then they try to deprive their neighbor of his unfair piece of the mud pie but while tax revolt austerity riots capture the public's imagination in secret back rooms in europe america trade deals are currently being negotiated which will impose a so-called investor state upon us all.
over the past few years there have been a slew of proposed deficit reduction plans from simpson bowles to the ryan budget now earlier i asked james galbraith if the u.s. should target the deficit in terms of a percentage of g.d.p. and here's what he had to say. the mass of this is such that if the interest rate on the lies below the growth rate of the economy in nominal terms nominal economic output growth may be five percent the interest rate on the debt is lower than that then the debt to g.d.p. ratio which is the. you're asking will stabilize at some point it may be at a fairly high value by historical standards but it will stabilize so that's and essence the criteria and for now that interest rate is certainly substantially below the growth rate of of g.d.p.
in dollar terms and we should there be a target and i know we've kind of fifth pacific if you had i don't think so no i think i think so long as you have a. position which is tending toward a stabilization then then over the long run you're. not facing any any significant problem the problem that the greeks have is that with six years of declining output their debt to g.d.p. ratio continues to go up and that's what started at one hundred ten percent or twenty percent of g.d.p. it's now one hundred seventy percent of g.d.p. it was unpayable at the start of this it's much more unpayable now and everybody knows there is going to have to be a restructuring of that debt in the u.s. case if you're trending toward stabilisation everybody knows that there will come a point when. when things will either go on indefinitely at that situation or actually the debt to g.d.p.
ratio will start to decline you know you've been a big proponent of pushing for transparency at the fed can you tell us why this is so important well the federal reserve is a creature of the congress and i started my career working for the banking committee which had oversight responsibility and the difficulty that we had was that there was no effective way of getting federal reserve the federal reserve chairman for example to answer simple questions like what's your outlook for the economy so we set up a framework where they had to come back on a regular basis and face the same people and face the same questions and that began to create a climate of much more responsiveness and i actually think the federal reserve has come in the normal sleeve all the way over the over. the last thirty or forty years they used to be a very obscure very. opaque agency and now they are much more open they do explain themselves to the to the world and they the federal
reserve board is intellectually i think in many ways the most interesting place in washington at the moment. now should the us continue to borrow as long as rates are low and if so if you think yes how can this possibly sustain itself without ever becoming a problem. well so long as you're borrowing at a rate determined by your own central bank and that rate is practically zero for the short end of the spectrum it really can become a problem should the federal reserve change policy then you get you would have a higher short term interest rate and that would cause problems for the private sector but the real. purpose of the policy is to get to a point where private financial institutions are again functioning and providing loans for the expansion of business activity and when that happens then the public sectors of financial activity will naturally decline focusing on the public sector
and saying we've got to cut that back on the assumption that the private sector will then somehow magically rise like a phoenix from the ashes is is is fallacious it's like going into the emergency room and saying gee look at all these i.v. bags that they must be causing terrible problems let's pull them out of the patients of a instance and get them up and get them working the more that doesn't always work is that it's not it's not it's sort of not clear on the concept here that you know i've got my final question for you can do you as things stand it's current account relationship with the rest of the world in particularly china. so long as the chinese wish to sell to us more than they buy from us that relationship will be sustained yes. the chinese may change their posture they may decide they don't need the export markets they may and they are increasing their imports as perfectly as commodity prices have risen their been obliged to so the chinese position will
possibly change this does not necessarily pose any great problem for us it simply means that the accumulation of assets that was going on becomes a little less so you think we should all just calm down and that are sure we should we should be of with respect to the states much calmer it's not the proper focus for policy concerns we have enormous problems of energy climate unemployment foreclosures. a whole spectrum of things which from which we are diverted by this discussion of financial ratios of the budget deficit of the financial condition of the social security fund which is basically just fine. and that. both gets us into a position where we will make bad decisions but also gets us away from a discussion of the problems we really should be facing now i lied i have one more question i just have to ask you directly what would happen if in february the
government simply decides not to raise the debt ceiling if interest rates don't there's. nobody knows it would pose terrific problems operationally for the treasury because they're not set up to cut off payments and they do not know which paved the way to to prioritize the payments they would continue in the payments that they would cut off. and it would cause of course if they did cut off payments in general they would cause a lot of problems for people who were on the margin who were depending upon a social security check or a or a a payment on a contract so you could imagine a good deal of disruption of actual activity or. who could imagine that the treasury would come up with some device for. continuing to make the payments there are ways the government could slip around as they're there they're well known the government has chosen not to do so i think the actual situation is that the
republican party has caved on this issue there is not a majority to block the rise in the debt ceiling and so this problem having been resolved a few weeks ago will be resolved in february in essentially the same way and i think everybody now realizes that that's the case so i'm confident actually that this problem is has been dealt with at least for now. that was james galbraith a professor at the university of texas at austin and son of prolific economist john kenneth galbraith now it's time for today's big deal. joining me now for today's big deal the one the only rachel corrie's is how you doing lady i'm doing great how are you ok now this is one of my favorite subjects
that we're going over today celebrity photos and they're not always from the red carpet some of the best ones now some of the most sincere and candid photos they come straight from the slammer yeah now here are some of our favorites who take these out check this hugh grant after he was caught with a hooker there is mel gibson twenty eleven paris hilton looking remarkably good when she said i mean come on that's a mug shot and of course one of the many many mug shots of miss lindsay low and i think we have another here check this out was this one branch oh oh oh oh oh oh oh oh oh oh oh i don't know. that i don't have a i've got are all i know is i wish there were some way that i could pay for that mugshot to be removed from the public record check this out rachel now you can your mug shot is in public record and here's the news this is kind of incredible now websites like just mug shots dot com they publish mug shots online and charge arrestees upwards of three hundred dollars to remove the picture off of the mug
shots are of people who were found not guilty now to put a stop to this payment companies such as master card american express and pay pal are taking matters into their own hands perhaps because some of the big wigs at those companies had mug shots of one time and they announced that they would not that they would cut ties with mug shot websites put in a major damper on the business model rachel do you think this is the right thing to do yes or no i think it's up to the. companies it's clearly a brand thing they were getting a lot of flack for the fact that they were participating in this whole scheme and it is a scheme that it's three hundred dollars a photo but let's say you have five mug shots of you get a deal you can pay a little less you know a bargain deal but what's so fascinating to me about it is that let's say it paid three hundred dollars to get myself through for a one mug shot web site there are still eleven or twelve other mug shot websites that i have to go to so it's a total racket it's incredible so these these companies essentially are saying they don't want to be involved in any more but it is as i said a total branding thing they just want to look good by saying we're not complicit in all of this awful stuff going on but it will have
a big effect on these websites now here's the question mug shots they are part of the public record correct they are i mean think about the most popular feature of any local newspaper it's the police blotter people love to know who got arrested for what all of the dirty nasty details and that is part of the public record. all of the actual mug shots that they got these web site companies got they got using essentially software that true that crawls through sheriff's web sites to get it so it is public information but the question is whether i mean they're seen as guilty for google another company that's kind of taken action has actually changed their algorithm to put these these web sites with mug shots much lower thank you grow the i mean the last thing i want is for that much i'm doing a lot of the other jobs that of us but at the same time what these websites are saying is listen how can you how can you say this isn't true exists look at what i did out of that's the way. the truth is that it was taken but what would people who are in those pictures are arguing is what you're missing is the context like the
follow up that says the way charges were dropped this was this wasn't true at all. as speaking as a journalist i found those web sites incredibly helpful when filing reports the navy yard shooter the first images of him came up from a mug shot web site now we also talked about this a little before the show you know kind of. at this other reminded you of the my space model yes there was a time when my space i'm not sure if this is so vain but that my space was actually having people paid to delete their accounts people who no longer remember their passwords didn't have the same email address to retrieve their passwords my space said fine if you really want to delete it pay us ten dollars you know your home and when your business model is pay us to shut down your account and if you don't want it anymore great will make money on that tribe everything that happened in my space . hurried that's all for now but you can see all segments featured in today's show on you tube at youtube dot com slash boom bust our t. and we also love hearing from your supporters check out our facebook page at
facebook dot com slash of boom bust our team from all of us here at broome buzz thank you for watching and see you next. so we leave the. oceans to. play you play the there's a good. shoes that no one is there with to get that you deserve answers from. exactly what happened that day i don't know but a woman i killed. appears later is when i got arrested for. for a crime i did not do. we have numerous cases where police officers lie about polygraph results you get innocent people to confess the police officers don't beat
people anymore i mean it just doesn't happen really you know in the course of interrogation why because there's been this is like meant no because the psychological techniques are more effective in obtaining confessions than physical abuse and they were off taking they could do what they wanted they can say what they wanted and there was no evidence of what they did or what they said. it was terrible a. very hard to take out. once again there was a plan by patton that had sex with that earthquake there are no plans. that only.
one of. the people. big bucks but. everybody going to do the job did you know the price is the only industry specifically mention in the constitution and. that's because a free and open press is critical to our democracy trek albus. role. in fact the single biggest threat facing our nation today is the corporate takeover of our government and outright cynical we've been
a hydrogen right hand full of transnational corporations that will profit by destroying what our founding fathers once told my job market and on this show we reveal the big picture of what's actually going on in the world we go beyond identifying the problem trucks rational debate real discussion critical issues facing. ready to join the movement then welcome to it. all people are interesting but he has something to say everybody as. i'm not the kind of person want to sit next to on the airport. i mean there's always in the waters and. that's whether it's a ballet dancer a ball player. does things that are curious to me is it just things i think about.
them or another. coming up on our t.v. on capitol hill the senate banking committee is debating over president obama's pick for federal reserve chair we could be watching history in the making up republicans don't want janet yellen nomination that is the latest ahead and what's your number just about everyone in the u.s. has some type of debt attached to their name but one group is working to rip. first that buying up tens of millions of dollars worth of debt and then sending a letter to the borrower saying that is all this forgive it so who holds the key to unchaining thousands of americans from their debt the answer coming up and take a look at this it's the world's first three d. printed metal gun and it could revolutionize the second amendment as we know it will speak to.